Basically Quote by Didier Sornette
“Economic theory dictates that the value of a company is basically the present value of its future profits. To estimate Facebook's value through its future profits, we need to have a view on its user growth and how this will evolve in the next 10 to 50 years.”
About This Quote
The quote explains that a firm's worth equals the discounted sum of its expected future earnings, so valuing a company like Facebook requires forecasting long‑term user growth and profit streams.
In simple terms: Company value is the present value of future profits.
Key Takeaway
Forecast user growth to estimate value.
Themes
finance
valuation
future earnings
Mood
analytical
cautious
Type
financial
strategic
When to use this quote
- investment analysis
- strategic planning
- stock valuation
- risk assessment
Key Concepts
discounted cash flow
growth modeling
Questions to Reflect On
- How reliable are long‑term growth forecasts?
- What factors could disrupt profit projections?
A Different Perspective
Assumes stable growth; future profits are hard to predict.
